OCR Still at 2.5 Percent

July 26, 2012 New Zealand Finance

OCR left at 2.5 percentThe Reserve Bank has left the OCR unchanged, due to the continued poor economic outlook overseas.

While speaking at a press conference in Wellington on July 26th the governor of the Reserve Bank Alan Bollard revealed that the New Zealand Official Cash Rate (OCR) would be maintained at its current level of 2.5 percent.

The governor said that “it remains appropriate for the OCR to be held at 2.5 percent”, as the country’s economic outlook has remained consistent with forecasts made at the previous OCR review in June. He elaborated, saying that the economic outlook for New Zealand’s key trading partners remains low.

The Reserve Bank still expects economic activity in New Zealand to grow “modestly over the next few years”, with the housing market still expected to pick up with the ongoing reconstruction work in the Canterbury region. However, the governor noted that some economic expansion is being is being held back by “fiscal consolidation and the exchange rate”.

Alan Bollard also said that within the medium term the annual inflation rate is meant to stabilize at the mid-point of the Reserve bank’s target rate.

Photo by Khirol Amir